Highs and Lows of Car Insurance Expense

February 28th, 2015 No Comments   Posted in insurance

Just how much does the average American pay for car insurance? Quite a lot! Michigan has the highest total at $2,551, and West Virginia, Georgia, Washinton D.C., and Rhode Island all have over $2000. There are only three states that pay less than $1000: New Hampshire with $938, Maine with $964, and Ohio with $926. It sure would be annoying to live in Southern Michigan and be paying more than double what Ohio is paying a few miles away.

Despite all the money we shell out for auto insurance, we very rarely end up using it. The average driver files a collision claim once every 17.9 years and a comprehensive claim once every 10 years. Sure, it’s great that we’re avoiding wrecks, but it also means we’re paying way too much for insurance.

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4 Things Not To Be Seen on Your Credit Report

February 19th, 2015 No Comments   Posted in Debt

Because a credit report is like a report card that basically says to lenders “here is how good I am at repaying my financial obligations,” it is something you need to have in order. Roughly one-in-four consumers have a “bad credit score” credit score that’s below 600. But in spite of any past financial troubles, no matter how severe, you can clean up your credit report with time and a little TLC.

This list contains items you don’t want to have on your credit report. If you have any of these marks on your file, it’s a good idea to work towards improving your credit sooner, rather than later. Although these marks generally stay on your credit file for a long time, you can still improve your credit if you focus on paying your obligations on-time from this moment forward.

1. Charge-offs

When you go a long period of time without making a payment on a credit account, the creditor may end up charging-off the debt. This usually occurs after around six missed payments and this simply means that the company does not think they are going to receive payment from you. So, for tax and accounting purposes, they have decided to cut their losses.

This usually does not benefit you, however, with the option of simply avoiding the debt forever. Not only do you generally still owe the debt, you now have a really bad mark on your credit report that you may not be able to get rid of for quite a long time.

In most cases, the best course of action is to pay the debt and also, improve your credit by paying your other obligations as scheduled, keeping your utilization on any other credit cards low, and ensuring you don’t have any charge-offs in the future.

2. Collections

This type of mark on your credit file is pretty straightforward — it means your account has been sent to collections. What can you do about this? Unfortunately, this type of negative mark may be stuck on your credit file for quite a long time (up to 7.5 years) as well.

Paying the account is often the first step to improving the situation as the account will then go from an “unpaid” collections account to a “paid” account. Although paying the account may not have a significant impact on your score, it may look better to a lender who’s reviewing your credit history and also potentially stop the collection agency or creditor from suing you. Also, according to Credit.com, the new Vantage Score 3.0 ignores paid collections accounts.

If a creditor does take legal action, they may obtain a judgement, which is another mark you don’t want on your credit file. Depending on the nature of the judgement and where you live, this may result in wage garnishment or another undesirable method of collecting the debt.

3. Tax Liens

We can’t run from taxes because sooner or later, they’ll catch up in a big way. A tax lien occurs when the tax man lays claim on some (or all) of your property because you didn’t pay the property, income, or other taxes you were supposed to. These liens can come from the IRS, state, or even local government.

Like most public records, these liens can stay on your credit file for a long time (seven years or so), and the best way to move forward is to pay the tax debt or, if possible, work out an arrangement with the tax man and stick to it.

4. Foreclosure

Nearly 1 million foreclosures were filed in the U.S. during the year 2013. Many people build credit history in hopes to buy their dream house. But, if they are unable to make payments on that house, they may end up losing their home and being stuck with a foreclosure on their credit file. This makes it more difficult to purchase a home in the future.

After a foreclosure, Freddie Mac suggests finding an affordable place to live and placing focus on rebuilding your credit. You may also want to talk to a credit counsellor or financial adviser about how to improve your financial situation.

Cartoons – Investment: Diversification

February 17th, 2015 No Comments   Posted in General Finance

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When Love and Money Clash

February 15th, 2015 No Comments   Posted in Personal Finance

In honor of Valentine’s Day, let’s see if a couple with significant financial differences was able to avoid divorce. As a reminder, “financial issues” is one of the top 3 causes of divorce in the US (along with “basic incompatibility” and “infidelity.”)

Susanna and Jason are both 53 and have been married 27 years; they have a 16 year old daughter. Susanna and Jason told me they constantly were locked into arguments about money. Their daughter sometimes was caught in the crossfire. (Note: details bear no resemblance to current or past clients).

Susanna reported she had a happy childhood, although the family was financially stretched. The kitchen was stocked from paycheck to paycheck and she grew up wearing hand-me-downs from cousins – but the atmosphere at home was good. Susanna scrimped and saved money throughout her teenage years but she still feels guilty if she splurges on anything. Susanna financed college with loans and her own savings (something that was easier to do 30+ years ago). Susanna equates hard work with money.

Jason grew up in more comfortable circumstances. He always had a generous allowance, traveled frequently with his family, ate out often and was given a new car when he turned 16. His parents paid for college and law school, leaving him debt-free. However, home life wasn’t harmonious since his parents used money and gifts to vie for Jason’s affection. The parents quarreled often about this and other financial issues. Fights intensified over the years and his parents divorced after Jason graduated from college. Jason equates money with conflict between his parents.
Like any couple, Susanna and Jason have emotional baggage they carried into their relationship. Although they’re financially comfortable, the atmosphere at home is acrimonious. Marriage counseling hasn’t helped them thus far.

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Love & Money: The Real Cost of Valentine’s Day

February 13th, 2015 No Comments   Posted in Personal Finance

Hallmark’s claim to fame is among us again: the holiday with less history than Kim Kardashian, and more money flowing than a small African nation. Besides the jest, having a night to designate for your loved one is important. Going out and emphasizing the reason why you’re in love is even more important. Let’s face it though, the single guys and girls are the real success stories of Valentine’s day. Young men and women facing their fears and asking each other out for a night on the town on the most romantic day of the year is devastatingly hard.

We’ve all been there. The first time, it took a two-hour conversation in order for me to gather up the nerves to ask my love out. Of course she said yes (thank God). From there it was easy going. Just kidding, my love life is a roller coaster ride and every Valentine’s Day, I’m either wrought with anxiety from not having a date, or riddled with the equivalent of having to plan an extravagant night out with my significant other.

According to the data below, men spend more money than women, but don’t count the girls out. They spend a pretty penny as well. Valentine’s Day is a night out for everyone. Show your love and make it one of the most romantic nights of the year.

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OK to Cheat On Your Taxes? Some Say Yes

February 11th, 2015 No Comments   Posted in General Finance

Integrity is sometimes loosely defined as “doing the right thing, even when no one is looking.” A variety of systems and situations in society rely on our honesty and integrity.

For instance, even children on Halloween are supposed to take only one piece of candy from those delicious-looking bowls full of treats. As we grow into adults, we’re trusted to act with integrity in many situations, and some people do so because they are afraid of the consequences associated with getting caught; others do so simply because it’s the right thing to do.

If you’re like most Americans, when you file your taxes each year, your goal is to maximize your financial gain or minimize your financial loss. With the average refund being more than $2,500 (as of the 2013 tax year), there is a lot of financial gain to be had.

Each year, an estimated 1.6 million people cheat on their taxes, according to estimates published on Statistic Brain. And what’s more, some taxpayers don’t seem to feel that cheating on taxes is all that big of a deal.

Public opinion on cheating

The IRS Oversight Board published its taxpayer attitude survey in December. Overall, 12% of respondents said that it was OK to cheat on your taxes, at least “a little here and there.” One-fourth of this group said that it was OK to cheat “as much as possible.”

The vast majority of Americans (86%), however, said that it was “not at all” OK.

With so many reports of corporate tax loopholes and large companies paying lower federal tax rates than some lower- and middle-income families, it may be a matter of fairness for some taxpayers. An attitude of “If they can do it, why can’t I?”

Other findings

The IRS Oversight Board survey also reported the following findings:

  • Overall, 93% of taxpayers said they “mostly or completely” agree that everyone who cheats on their taxes should be held accountable. Sixty-six percent said they completely agree with this sentiment, and 7% said they disagree.
  • The public seems to feel the most strongly about higher-income taxpayers and corporations paying their fair shares of taxes, with 97% of respondents saying it is either “somewhat important” or “very important” for the IRS to ensure these groups honestly pay their fair shares. When asked the same question about low-income taxpayers, only 93% said it was “somewhat” or “very important” for the IRS to ensure low-income groups pay their share.
  • The Board also asked taxpayers about certain factors that may have influenced their decision to pay their taxes and refrain from cheating. The top reason respondents cited for being honest on their tax returns was personal integrity.
  • Based on the survey, the median time a taxpayer is willing to wait on hold to get a question answered by an IRS customer service representative is 10 minutes